Election 2012

How the Democratic Base Could Lose This Election for Obama

By Clive Crook, The Atlantic

"President Obama is prepared to veto legislation to block year-end tax hikes and spending cuts, collectively known as the 'fiscal cliff,' unless Republicans bow to his demand to raise tax rates for the wealthy, administration officials said." So reported The Washington Post on Thursday. The article assumes, plausibly, that nothing will actually happen until after the election, and points out that whoever wins, the tactical calculations will then look different. True. In the meantime, though, this veto talk gives Romney an opening. The Democrats are making a big mistake.

The Obama campaign wants to spin the moronic stand-off over the fiscal cliff as follows: The Republicans are so keen to protect the rich from higher taxes that they are willing to raise everybody's taxes rather than yield. But Romney can spin it just as easily his way: The Democrats are so keen raise taxes on the rich that they're willing raise everybody's taxes to do it. Democrats apparently think Obama's position is more appealing to centrist voters than Romney's. They're wrong.

First, let's be clear that the veto gives the president the last word. If Congress sends him a measure that fails his test and leaves tax rates on the rich unchanged, his veto is the act that raises everybody's taxes.

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Second, think about the underlying arguments. The Republicans can say they're risking fiscal doomsday to defend the principle that nobody's taxes should rise. The Democrats have to say they're risking fiscal doomsday to defend the principle that the rich should pay more tax. Which of those positions looks more reasonable under present circumstances? Romney can say he's prioritizing growth--that that's his overriding goal. The only way to read the Democrats' reply is that redistribution matters more. Their position looks all the more unreasonable if you agree with Democrats (as you should) about the economic dangers of an abrupt fiscal contraction. As good anti-austerity Keynesians, they should be more willing than Republicans, not less, to delay tax increases while the economy's so weak. Their zeal to raise taxes on the rich outweighs every other consideration: That's the message.

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Democrats say opinion polls show that higher taxes on the rich would be popular. That's true. Voters understand that taxes will have to rise, and most of them would prefer the increase to fall most heavily on the rich. But Democrats are misreading this. For centrist voters, taxing the rich more heavily isn't an end in itself. It's a way to lighten the load on the non-rich. The polls aren't saying that voters will pay any price and bear any burden to punish the rich: "Sure, raise taxes on my middling income if you must. It'll be worth it to see the rich pay a higher top rate." It's absurd, but that's how Obama's veto threat understands public opinion.

Obama should propose another temporary extension of all the Bush tax cuts. He should do it at once, to lift the uncertainty that's impeding the recovery. He should say he'll push for a comprehensive tax reform early in his next term--one that raises significantly more revenue much more more efficiently, and that collects a bigger share from the rich. But right now he needs to say that sustaining the recovery comes first, and dare Republicans to disagree.

Here's an interesting question: Why hasn't he done this already? Because if he did, the Democratic base would go ape. Its view is that raising taxes on the rich really does outweigh every other consideration. The Democratic base would prefer 1 percent growth and a higher top rate next year to 3 percent growth and no increase in the top rate. (Perhaps that's unfair. A few would need to think about it.) When Obama did the right thing before and agreed under pressure to leave the Bush tax rates in place, the left of the party attacked him furiously. His big mistake all along, in their view, has been to compromise too much. His campaign must dread the outcry--at best, the collapse in activists' enthusiasm--if he "surrenders" again before the election.

Hence the veto talk. It's understandable--but if Obama isn't careful, the base-pleasing hard line on the fiscal cliff could send Romney to the White House. Courtesy of progressives.